US Hospitals Cut Services After New Federal Bill
Hospitals across the U.S. are making significant budget cuts and reducing services in response to recent federal legislation, dubbed the 'big beautiful bill,' that changed reimbursement formulas. The cuts are already becoming a flashpoint for the midterm elections, with Democrats claiming the bill is undermining patient care.
The "big beautiful bill," officially known as the One Big Beautiful Bill Act (OBBBA), was signed into law on July 4, 2025. The legislation, a cornerstone of President Donald Trump's second-term agenda, extends individual tax cuts from 2017 and increases spending on immigration enforcement, while significantly reducing funds for healthcare and nutrition assistance. The bill passed without any Democratic support, relying on the budget reconciliation process to avoid a Senate filibuster. The legislation is projected to slash federal Medicaid spending by approximately $1 trillion over the next decade. These are the largest cuts in the history of the program. The Congressional Budget Office (CBO) estimates these changes will lead to 11.8 million more uninsured Americans by 2034. The bill also imposes new work requirements for many Medicaid recipients and alters how states can use provider taxes to help finance their share of the program. Hospitals in multiple states have already begun cutting jobs and services, citing the new law's financial pressures. For example, Alameda Health System in California is laying off 187 employees, and Pomona Valley Hospital Medical Center is eliminating 265 positions. In Georgia, St. Mary's Sacred Heart hospital closed its obstetric ward, with a spokesperson stating the Medicaid cuts "solidified our decision." Rural hospitals are expected to be disproportionately affected by the funding changes. Medicaid often accounts for a significant portion of their revenue, and many were already operating on thin margins. The American Hospital Association projected the bill's Medicaid provisions would cut federal spending for rural hospitals by $50.4 billion over ten years, potentially forcing many to close or eliminate key services. In response to these concerns, the bill's proponents point to the creation of a $50 billion Rural Health Transformation Program designed to help stabilize rural providers. However, the administration has since limited the amount of these funds that can directly benefit healthcare providers to 15%, with the rest intended for broader state initiatives. The healthcare cuts have become a central issue in the upcoming midterm elections, with Democrats aiming to leverage voter opposition to the law. While many of the most significant Medicaid cuts are scheduled to take effect after the 2026 elections, Democrats are highlighting the immediate impacts and potential future consequences for patient care. Republicans are defending the law as a necessary measure to control spending and reduce what they term waste and fraud in the system.
